The Last Time THIS Happened the Global Stock Market RESET  | Felix Nikolas Prehn
https://www.youtube.com/watch?v=FDNoVCQeGls
Language: en | ASR: large-v3-turbo @ 0a363e9161cbc7ed1431c9597a8ceaf0c4f78fcf

[00:00:00.000 --> 00:00:05.860] Speaker 1: Three men built the company that the whole AI boom runs through. And since it went public,
[00:00:05.860 --> 00:00:12.760] Speaker 1: listed in New York, they've sold $3 .3 billion of their own shares. And right now,
[00:00:13.000 --> 00:00:19.380] Speaker 1: that company's debt trades like the debt of a business in some serious trouble. Share price
[00:00:19.380 --> 00:00:26.240] Speaker 1: is down about 65 % from the top and the cost of insuring its debt against bankruptcy hit a
[00:00:26.240 --> 00:00:32.280] Speaker 1: record high. And most of the stock market hasn't really noticed. Your index fund is still
[00:00:32.280 --> 00:00:38.440] Speaker 1: full of the same AI names, but some people have noticed. Goldman Sachs' own trading desk
[00:00:38.440 --> 00:00:43.680] Speaker 1: just told its institutional clients how it thinks this is going to play out. The hedge
[00:00:43.680 --> 00:00:48.880] Speaker 1: funds and the big pension fund money, they've been told, not you. Now, I've read the
[00:00:48.880 --> 00:00:53.940] Speaker 1: report. Winston's read the report. And there is one line in it that I believe you also
[00:00:53.940 --> 00:01:00.300] Speaker 1: deserve to understand. because the last time the market fell in love with the companies
[00:01:00.300 --> 00:01:06.220] Speaker 1: building the future and the money behind them started to crack and leave the building, the
[00:01:06.220 --> 00:01:12.180] Speaker 1: global stock market reset. It took 15 years to come back. My name is Felix Nicholas Preen.
[00:01:12.280 --> 00:01:15.980] Speaker 1: I'm an economist and former investment banker. And now, of course, down there is Winston.
[00:01:16.200 --> 00:01:20.000] Speaker 1: We're also the founder of the Preen Institute where we publish research on how financial
[00:01:20.000 --> 00:01:24.860] Speaker 1: markets operate and we also provide instruction on it. There's no sponsorship here. There
[00:01:24.860 --> 00:01:30.340] Speaker 1: is no endorsement ever, and it means Winston and I can say whatever the heck we like. So
[00:01:30.340 --> 00:01:36.600] Speaker 1: ask yourself this. Do they know something you don't? And by the end of this video,
[00:01:36.820 --> 00:01:41.300] Speaker 1: you will know what they know. Stick around. Now, I'm going to go through quite a lot of
[00:01:41.300 --> 00:01:45.560] Speaker 1: numbers today. So I put all of that into a short report, the filings, the charts, the
[00:01:45.560 --> 00:01:51.140] Speaker 1: Goldman Sachs stuff, and the list of what I'm watching. It's completely free. There is
[00:01:51.140 --> 00:01:56.280] Speaker 1: nothing to buy. The link is down below. FelixFriends .org. slash market reset. And if
[00:01:56.280 --> 00:02:01.680] Speaker 1: you're watching this at all, you're already ahead of like 99 % of people because most of
[00:02:01.680 --> 00:02:06.060] Speaker 1: them will hear about this from a headline about their pension or they'll look at their
[00:02:06.060 --> 00:02:11.360] Speaker 1: portfolio in a while and they'll look at it long after they could do anything to help
[00:02:11.360 --> 00:02:15.860] Speaker 1: themselves. So who are these three men and what have they built? Well, the company is
[00:02:15.860 --> 00:02:20.380] Speaker 1: called CoreWeave and most people have never heard of it, made some headlines this week, but
[00:02:20.380 --> 00:02:26.360] Speaker 1: the business is basically very simple. CoreWeave buys enormous numbers of NVIDIA chips, it
[00:02:26.360 --> 00:02:31.620] Speaker 1: puts them in data centers, and it rents them out to AI companies by the hour. Think of it
[00:02:31.620 --> 00:02:37.240] Speaker 1: as the prostitute of the AI world. I'm sure that's what the pitch deck said. All right, so
[00:02:37.240 --> 00:02:40.360] Speaker 1: people know, they have a better name for it. They call it NeoCloud. It's a little bit more
[00:02:40.360 --> 00:02:46.620] Speaker 1: attractive. And a NeoCloud company builds only for AI. And how does it pay for all those
[00:02:46.620 --> 00:02:52.060] Speaker 1: chips? Well, with borrowed money. CNBC puts its debt of around 50 billion dollars let me
[00:02:52.060 --> 00:02:57.000] Speaker 1: see where let me see where winston's has it well this is kind of interesting winston here
[00:02:57.000 --> 00:03:00.620] Speaker 1: says they have three months cash left before they run out of money that's a little
[00:03:00.620 --> 00:03:07.620] Speaker 1: concerning but either way it's pretty staggering for a company that only
[00:03:07.620 --> 00:03:14.540] Speaker 1: listed like last march literally last march now the founders so when a director or a senior
[00:03:14.540 --> 00:03:18.580] Speaker 1: executive in american company buys or sells shares the law says they have to tell the
[00:03:18.580 --> 00:03:23.820] Speaker 1: regulators the SEC actually within two days, which is pretty decent, right? Politicians and
[00:03:23.820 --> 00:03:29.080] Speaker 1: funds, it's like months. And it's called a form four and anybody can read it. So of course,
[00:03:29.160 --> 00:03:33.740] Speaker 1: nobody reads it. But what we've done instead is that, again, in the Winston up here,
[00:03:33.860 --> 00:03:37.780] Speaker 1: there's a link down below if you guys want to play around with it for free for a month. You
[00:03:37.780 --> 00:03:42.500] Speaker 1: can see these little red arrows here, right? Well, these are insider cells and they're
[00:03:42.500 --> 00:03:48.480] Speaker 1: pretty significant. We're talking $77 million dollars in the last,
[00:03:48.960 --> 00:03:54.840] Speaker 1: since like September, right? Pretty crazy stuff. Now, if you own this company, you could
[00:03:54.840 --> 00:03:58.860] Speaker 1: also get notifications on it and then it would just ping on your phone and then you'd know
[00:03:58.860 --> 00:04:02.520] Speaker 1: about it. And I do that for the companies that I own because that way I'm informed that
[00:04:02.520 --> 00:04:07.900] Speaker 1: these things happen before most people. But if you add up every sale by these three co
[00:04:07.900 --> 00:04:10.520] Speaker 1: -founders, here's a screenshot. We actually did this work before.
[00:04:12.040 --> 00:04:18.860] Speaker 1: Add them all up. CEO, 975 million, Brannon McBee, the co -founder, $1 .1
[00:04:18.860 --> 00:04:24.380] Speaker 1: billion. And Brian Ventura, they all called Brian, $1 .2 billion. That one's called
[00:04:24.380 --> 00:04:29.500] Speaker 1: Brannon. That's a funny name, isn't it? Parents couldn't spell much. Okay, I'm being mean
[00:04:29.500 --> 00:04:33.880] Speaker 1: now. I take it back. I'm sorry. I mean, look at my name. Try spelling that. Good luck. So,
[00:04:34.040 --> 00:04:40.940] Speaker 1: pretty significant. Why? Because, well, according to Bloomberg, the McBee chap sold 40 % of
[00:04:40.940 --> 00:04:44.920] Speaker 1: its stake. Now, these guys still own about a fifth of the company, right? So there's
[00:04:44.920 --> 00:04:50.040] Speaker 1: nothing illegal here, but you'd want to know, wouldn't you? The people who know a business
[00:04:50.040 --> 00:04:56.640] Speaker 1: best keep selling, you at least want to ask why. Now, the debt. A bond is an IOU.
[00:04:57.040 --> 00:05:02.460] Speaker 1: You lend a company $1 ,000, it pays you interest every year, and it gives you $1 ,000 back
[00:05:02.460 --> 00:05:09.440] Speaker 1: on a set date. So Corweave has these bonds that pay just under 10 % interest, and
[00:05:09.440 --> 00:05:16.360] Speaker 1: they get repaid in 2032. Now, you can now buy that bond for 76 cents.
[00:05:16.780 --> 00:05:23.480] Speaker 1: So that means you are effectively going to get 15 % interest to lend these buggers money.
[00:05:23.900 --> 00:05:28.940] Speaker 1: Now, when do you ask someone for 15 % interest? Well, when you're not sure you're going to
[00:05:28.940 --> 00:05:34.720] Speaker 1: get your money back. And then, of course, it gets worse. There is an insurance market for
[00:05:34.720 --> 00:05:40.780] Speaker 1: DEC. It's called credit default swaps, and you might remember them from 2008 because all
[00:05:40.780 --> 00:05:46.540] Speaker 1: the mortgages were also insured that way. So if the company can't pay, this policy will pay
[00:05:46.540 --> 00:05:49.940] Speaker 1: out. The riskier the company, the more the insurance costs.
[00:05:51.160 --> 00:05:58.120] Speaker 1: Insuring Corweave's debt for just five years now costs more than 11 % of the amount insured
[00:05:58.120 --> 00:06:03.640] Speaker 1: every year. It's a record, not the good kind of record. Bloomberg says the price implies
[00:06:03.640 --> 00:06:10.280] Speaker 1: roughly 60 % odds of default, i .e. bankrupts. So how does that happen to a company
[00:06:10.280 --> 00:06:15.980] Speaker 1: with so many customers? Well, Deutsche Bank did the sums. Korweef brings in about 10
[00:06:15.980 --> 00:06:21.360] Speaker 1: billion a year in cash from running the business. It plans to spend 45 billion on ships and
[00:06:21.360 --> 00:06:26.600] Speaker 1: buildings, which leaves a gap of 35 billion dollars. And a gap like that gets filled with
[00:06:26.600 --> 00:06:30.920] Speaker 1: more borrowing. Yeah, they've learned from the US government, I think. Now, in fairness,
[00:06:31.460 --> 00:06:33.860] Speaker 1: Deutsche thinks the shares are still a buy.
[00:06:35.480 --> 00:06:41.460] Speaker 1: Corweave has $104 billion of signed work waiting to be delivered. About two -thirds of that
[00:06:41.460 --> 00:06:45.420] Speaker 1: is with customers who have very strong credit ratings. So the CEO called the sell -off
[00:06:45.420 --> 00:06:50.980] Speaker 1: irrational. And maybe he's right. But think about what happens to your portfolio and your
[00:06:50.980 --> 00:06:57.540] Speaker 1: pension and your ISAs and everything else if the lenders stop lending Corweave. That's the
[00:06:57.540 --> 00:07:02.420] Speaker 1: question most people can't answer. And it isn't because they're not clever enough. Just
[00:07:02.420 --> 00:07:07.860] Speaker 1: reading what the debt market is telling you before the share price catches up is a skill.
[00:07:08.280 --> 00:07:12.600] Speaker 1: It's a skill you were never taught. You were taught a load of gibber and nonsense about
[00:07:12.600 --> 00:07:18.660] Speaker 1: geography and everything else, but you weren't taught this. So it's not your fault, but it
[00:07:18.660 --> 00:07:23.740] Speaker 1: is your responsibility to learn it if you want to keep what you've spent your whole working
[00:07:23.740 --> 00:07:28.480] Speaker 1: life building. And you can learn it. You've learned plenty of skills already, right? You
[00:07:28.480 --> 00:07:33.180] Speaker 1: know, walking, swimming, riding a bike, that sort of thing. Nobody was born knowing any of
[00:07:33.180 --> 00:07:37.340] Speaker 1: that stuff, right? But it'll be crawling around on, you know what. So I'm going to teach it
[00:07:37.340 --> 00:07:43.960] Speaker 1: to you for free in a live training. I'll show you how a reset in AI is going to reach your
[00:07:43.960 --> 00:07:48.860] Speaker 1: portfolio and your pension, how to tell the companies that own scarce computing power from
[00:07:48.860 --> 00:07:53.760] Speaker 1: the ones that are just borrowed to rent it out, and which warning lights in the debt market
[00:07:53.760 --> 00:07:59.380] Speaker 1: I check first, and how the skilled money is actually positioning right now before any of
[00:07:59.380 --> 00:08:05.700] Speaker 1: this lands in mainstream media. So most of you will prepare after a reset. And by then, the
[00:08:05.700 --> 00:08:10.900] Speaker 1: prices have already moved. So the time to prepare is now, while the Nasdaq is still sitting
[00:08:10.900 --> 00:08:15.520] Speaker 1: in the all -time highs and you still have choices. And it is completely free. It is
[00:08:15.520 --> 00:08:19.280] Speaker 1: completely live. You can ask me questions. So how do you do that? Well, you go to
[00:08:19.280 --> 00:08:25.340] Speaker 1: survivethebubble .com. The link is down below in the comments in the description. And then
[00:08:25.340 --> 00:08:30.120] Speaker 1: you put the word ACT in the comments. so I know that you're coming. Just three letters. So
[00:08:30.120 --> 00:08:35.740] Speaker 1: ask yourself, has this happened before? Well, it has. And the perils are a little
[00:08:35.740 --> 00:08:40.640] Speaker 1: uncomfortable. Go back to the spring of 2000. This is not doom and gloom. This is a lesson.
[00:08:40.960 --> 00:08:47.260] Speaker 1: The internet was going to change everything, and it did. That part was genuinely true. The
[00:08:47.260 --> 00:08:53.120] Speaker 1: company everybody wanted to own was called Cisco. Cisco made routers, not the thong song
[00:08:53.120 --> 00:08:58.040] Speaker 1: guy, the router guy, or routers, I guess you might say. And they made the switches that
[00:08:58.040 --> 00:09:03.520] Speaker 1: carried internet traffic the plumbing. And if you believed in the internet, you bought the
[00:09:03.520 --> 00:09:09.240] Speaker 1: plumbing, which sounds a little familiar. So in March 2000, Cisco became the most valuable
[00:09:09.240 --> 00:09:14.060] Speaker 1: company in the world, worth about half a trillion dollars. Its shares traded around 200
[00:09:14.060 --> 00:09:19.060] Speaker 1: times its profits. So for every dollar of profit Cisco made in a year, buyers were paying
[00:09:19.060 --> 00:09:25.460] Speaker 1: $200 for the shares. Now, the Nasdaq is the American stock index packed with tech
[00:09:25.460 --> 00:09:32.200] Speaker 1: companies. And on the 10th of March 2000, it closed at 5 ,048 points.
[00:09:32.620 --> 00:09:39.600] Speaker 1: That was the top. And then the money changed its mind. So what does that actually mean? A
[00:09:39.600 --> 00:09:45.580] Speaker 1: boom like this runs on other people's money. Shareholders buy new shares. Banks and bond
[00:09:45.580 --> 00:09:50.600] Speaker 1: buyers lend. And the company spend it building things. As long as the money keeps coming
[00:09:50.600 --> 00:09:55.820] Speaker 1: in, everything looks wonderful. But what happens when the lenders get a little bit nervous?
[00:09:55.980 --> 00:10:02.360] Speaker 1: or the cost of borrowing goes up. Some companies can't borrow at all, so they cut their
[00:10:02.360 --> 00:10:08.220] Speaker 1: spending. And the companies that were selling to them suddenly have fewer orders. That's
[00:10:08.220 --> 00:10:13.060] Speaker 1: how a boom turns. It's not with one big announcement. It's with a lot of quiet decisions to
[00:10:13.060 --> 00:10:18.140] Speaker 1: stop lending. Pets .com is the one everybody remembers. It sold pet food online. It listed
[00:10:18.140 --> 00:10:24.420] Speaker 1: its shares in February, $2011. It spent $1 .2 million in a Super Bowl advert with a sock
[00:10:24.420 --> 00:10:30.420] Speaker 1: puppet. And then the cash ran out. 268 days after listing, it announced it was shutting
[00:10:30.420 --> 00:10:37.340] Speaker 1: down. The shares ended at 19 cents. Now, Pets .com was a silly business. You'd expect it to
[00:10:37.340 --> 00:10:42.540] Speaker 1: fail. The harder lesson is what happens to the good ones. Amazon was a real company with
[00:10:42.540 --> 00:10:46.820] Speaker 1: real customers buying real things every day in a business that would go on to change how
[00:10:46.820 --> 00:10:53.780] Speaker 1: the whole world shops. Its shares fell 94 % from the peak. So if you put a $10 ,000 at
[00:10:53.780 --> 00:11:00.020] Speaker 1: the top, you'd have $600 left. In Cisco, the plumbing, with the genuine profits, its shares
[00:11:00.020 --> 00:11:06.660] Speaker 1: didn't make a new closing high until December 2025. That's 25 years later.
[00:11:06.860 --> 00:11:11.520] Speaker 1: So even if you picked the best company of the whole era and you paid the wrong price, you
[00:11:11.520 --> 00:11:16.880] Speaker 1: waited 25 years just to get your money back. And of course, you would have missed out on 25
[00:11:16.880 --> 00:11:21.720] Speaker 1: years of rally, so you were massively poorer. But the company was actually fine. It was
[00:11:21.720 --> 00:11:27.900] Speaker 1: just that the price you paid was the problem. The Nasdaq kept falling for 31 months and it
[00:11:27.900 --> 00:11:31.340] Speaker 1: finally hit bottom on the 9th of October, 2002.
[00:11:32.840 --> 00:11:39.400] Speaker 1: 78 % below the peak. And again, we didn't get a record high again until April
[00:11:39.400 --> 00:11:45.200] Speaker 1: 2015. 15 years. Now, it didn't fall on a straight line. There were big rallies on the way
[00:11:45.200 --> 00:11:49.800] Speaker 1: down. Every one of them convinced people that the worst was over. People bought the dip and
[00:11:49.800 --> 00:11:54.820] Speaker 1: then they bought it again. And that's what made it so painful. Hope kept pulling them back
[00:11:54.820 --> 00:12:01.660] Speaker 1: in. So what does a 78 % fall feel like? Well, say you were 55 in 2000 and you had $200 ,000
[00:12:01.660 --> 00:12:07.840] Speaker 1: in tech stocks. Well, two and a half years later, you had $44 ,000 and
[00:12:07.840 --> 00:12:14.480] Speaker 1: you were 70 by the time it's back to where you started. That's what a stock market reset
[00:12:14.480 --> 00:12:20.000] Speaker 1: really looks like. The technology carried on. The number of people online kept growing
[00:12:20.000 --> 00:12:24.100] Speaker 1: every single year, and things like email and shopping online went from a novelty to just
[00:12:24.100 --> 00:12:30.580] Speaker 1: normality, yet the share prices kept collapsing. But the prices people had paid for it had
[00:12:30.580 --> 00:12:35.800] Speaker 1: come back to earth, and the companies that had run out of other people's money just
[00:12:35.800 --> 00:12:41.140] Speaker 1: disappeared. So why does this matter? Because the shape is the same. The technology that
[00:12:41.140 --> 00:12:46.100] Speaker 1: really is changing the world, sitting on top of a small group of plumbing companies that
[00:12:46.100 --> 00:12:51.580] Speaker 1: everyone feels they have to own. In 2000, the plumbing was routers and fiber optic cables.
[00:12:51.740 --> 00:12:58.060] Speaker 1: Today, the plumbing is AI chips and data centers. And CoreWeave is about as pure a plumbing
[00:12:58.060 --> 00:13:03.020] Speaker 1: company as you can buy. It doesn't make the chips. It doesn't write the AI. It borrows
[00:13:03.020 --> 00:13:08.060] Speaker 1: money. It buys the chips. It rents them out. And that works brilliantly while the lenders
[00:13:08.060 --> 00:13:14.240] Speaker 1: are happy to lend. Now, it gets very hard, very, very fast when they're not. And you might
[00:13:14.240 --> 00:13:18.940] Speaker 1: say, Felix, Corweave is one company, who cares? Well, Corweave doesn't own every building
[00:13:18.940 --> 00:13:23.460] Speaker 1: it uses. It rents a lot of its data centers on other companies. Some of those companies
[00:13:23.460 --> 00:13:29.740] Speaker 1: raised money by selling bonds. And the thing that pays those bonds is Corweave's rent. So
[00:13:29.740 --> 00:13:35.240] Speaker 1: if Corweave struggles, their lenders have a problem too. And Deutsche Bank says Corweave
[00:13:35.240 --> 00:13:41.380] Speaker 1: will need to raise more money over the next 12 to 18 months just to deliver the work it has
[00:13:41.380 --> 00:13:46.100] Speaker 1: already signed contracts for. So where does that money come from if the lenders are already
[00:13:46.100 --> 00:13:52.860] Speaker 1: demanding 15 % interest? See, the money that lent CoreWeave, the money that lent to
[00:13:52.860 --> 00:13:57.140] Speaker 1: CoreWeave doesn't live in a box on its own. It comes from the same funds, the same banks,
[00:13:57.200 --> 00:14:01.820] Speaker 1: and in some cases, the same pension schemes that are in the rest of the market. So when one
[00:14:01.820 --> 00:14:07.280] Speaker 1: big borrower wobbles, the lenders start asking harder questions of everyone else who
[00:14:07.280 --> 00:14:12.060] Speaker 1: borrowed to build AI. And it isn't only CoreWeave either. A measure of what it costs to
[00:14:12.060 --> 00:14:16.720] Speaker 1: ensure the debt of tech companies has been rising. The last time that measure spiked, the
[00:14:16.720 --> 00:14:23.720] Speaker 1: Nasdaq shrugged and kept climbing. This time, the Nasdaq is falling alongside it. So
[00:14:23.720 --> 00:14:28.300] Speaker 1: when the lenders and the shareholders get nervous at the same moment, you should pay
[00:14:28.300 --> 00:14:33.520] Speaker 1: attention. And that's how a problem in just one little corner becomes a problem for the
[00:14:33.520 --> 00:14:40.340] Speaker 1: whole index and everybody else. But if you go back, the story didn't end in 2002. And the
[00:14:40.340 --> 00:14:46.360] Speaker 1: next part is the reason I'm not panicking. While everybody was selling the future, which
[00:14:46.360 --> 00:14:53.000] Speaker 1: was being built at bargain prices, well, guess what? Google IPO'd in 2004 at $85.
[00:14:53.600 --> 00:14:59.200] Speaker 1: That was less than two years after the bottom. In March 2006, Amazon launched a service
[00:14:59.200 --> 00:15:05.980] Speaker 1: called S3. It let any business rent storage on Amazon's computers instead of buying its
[00:15:05.980 --> 00:15:12.120] Speaker 1: own. And that was the start of what people call the cloud. And it's exactly the business
[00:15:12.120 --> 00:15:17.580] Speaker 1: call weaves in today, only with AI chips instead of hard drives. Apple launched the iPhone
[00:15:17.580 --> 00:15:22.740] Speaker 1: in 2007, and by 2009, Amazon's shares were back above their old peak and on the way to
[00:15:22.740 --> 00:15:29.460] Speaker 1: becoming one of the biggest companies on Earth. So the reset didn't kill the technology.
[00:15:29.680 --> 00:15:36.040] Speaker 1: It just moved the money away from the companies that needed endless borrowing and towards
[00:15:36.040 --> 00:15:40.600] Speaker 1: the ones that could stand on their own feet. So if you understood that in 2002, it was the
[00:15:40.600 --> 00:15:45.100] Speaker 1: opportunity of a lifetime. If you didn't, it was the end of your retirement plan. So today,
[00:15:45.340 --> 00:15:50.220] Speaker 1: is it the same? Well, not exactly. And you need to hear both sides of this. First, the
[00:15:50.220 --> 00:15:54.580] Speaker 1: press. Analysts use something called price to earnings ratio, which I think is actually
[00:15:54.580 --> 00:15:58.540] Speaker 1: fairly useless. But essentially, you take the share price and you divide it by the profits
[00:15:58.540 --> 00:16:05.300] Speaker 1: per share. So it tells you how many years of today's profits are you paying for. Now in
[00:16:05.300 --> 00:16:10.840] Speaker 1: 2000, Cisco was trading at 200 times earnings. Today, the Nasdaq 100, the 100 biggest tech
[00:16:10.840 --> 00:16:16.180] Speaker 1: companies, traded about 21 times the profit analysts expect next year. That's from
[00:16:16.180 --> 00:16:22.560] Speaker 1: Bloomberg. And it's back near the lowest level since the AI boom took off in 2023. So is it
[00:16:22.560 --> 00:16:28.700] Speaker 1: expensive? Well, yes, but it's a long way from the crazy numbers of 2000. And second, the
[00:16:28.700 --> 00:16:33.240] Speaker 1: demand is real. The price to rent the most advanced NVIDIA chips by the hour is still
[00:16:33.240 --> 00:16:38.260] Speaker 1: strong. Even older chips still rank out at good prices. So computing power is still scarce.
[00:16:38.440 --> 00:16:43.040] Speaker 1: And when something is scarce, the people who already own it tend to do well. And then
[00:16:43.040 --> 00:16:48.820] Speaker 1: third, look at who's paying for most of the building. The biggest tech companies, the ones
[00:16:48.820 --> 00:16:53.980] Speaker 1: that run their own giant clouds, pay for a lot of their AI spending out of the profits from
[00:16:53.980 --> 00:17:00.080] Speaker 1: businesses that they already have. Search adverts, office software, online shopping. So
[00:17:00.080 --> 00:17:04.200] Speaker 1: CoreWeave doesn't have a business like that underneath it. it has rental contracts and a
[00:17:04.200 --> 00:17:09.680] Speaker 1: lot of debt. In 2000, far more of the boom was running on borrowed money, though, and just
[00:17:09.680 --> 00:17:16.380] Speaker 1: hope than today. So if we go back to what Goldman Sachs said, one of its senior traders
[00:17:16.380 --> 00:17:21.520] Speaker 1: told clients just how brutal the last few days have been for hedge funds. These are the
[00:17:21.520 --> 00:17:26.100] Speaker 1: funds that bet on some shares going up and others going down at the same time. And a
[00:17:26.100 --> 00:17:32.520] Speaker 1: systematic version of that strategy fell 1 .4 % in a day. And that sounds small.
[00:17:32.700 --> 00:17:39.700] Speaker 1: But that move is something that statistically almost never happens. Funds were selling
[00:17:39.700 --> 00:17:44.100] Speaker 1: the shares they owned and buying back the shares they'd bet against all at once because
[00:17:44.100 --> 00:17:48.420] Speaker 1: they had to, rather than because they wanted to. It was forced selling. Funds that tracked
[00:17:48.420 --> 00:17:54.680] Speaker 1: chip companies traded their biggest volumes for a long time. And Goldman Sachs suspects
[00:17:54.680 --> 00:18:00.780] Speaker 1: that day may turn out to have been a local bottom, a short -term low. He thinks the fear
[00:18:00.780 --> 00:18:07.520] Speaker 1: about debt had gotten ahead of itself for now and that's worth hearing not every scare city
[00:18:07.520 --> 00:18:12.940] Speaker 1: so not every scare becomes a crash plenty of sell -offs in the last two years looked
[00:18:12.940 --> 00:18:17.840] Speaker 1: frightening and then simply stopped and we kept going up but then he wrote the one line i
[00:18:17.840 --> 00:18:24.240] Speaker 1: mentioned at the start he said too much capital is chasing too little investable power
[00:18:24.240 --> 00:18:30.640] Speaker 1: -ready compute capacity and he said the repricing could happen gradually or through a
[00:18:30.640 --> 00:18:36.840] Speaker 1: violent dislocation that spills into broader markets. Now, broader markets is your index
[00:18:36.840 --> 00:18:42.320] Speaker 1: fund. It's your retirement. And what does violent dislocation mean? Well, it looks like a
[00:18:42.320 --> 00:18:48.920] Speaker 1: share falling 15 % in a day. Cool, we've did roughly that this week. Now, think
[00:18:48.920 --> 00:18:55.800] Speaker 1: what that would do to one of the giant AI names that
[00:18:55.800 --> 00:19:00.280] Speaker 1: sits in almost every index fund and pension. So what have we learned? Well, the chips are
[00:19:00.280 --> 00:19:04.560] Speaker 1: scarce. The power to run them is scarce. But the money borrowed to buy them is enormous.
[00:19:05.060 --> 00:19:09.500] Speaker 1: Somebody gets paid in that squeeze and somebody gets left holding the debt. There's a
[00:19:09.500 --> 00:19:15.580] Speaker 1: research firm called Gardner and they expect more than 80 % of these neocloud companies to
[00:19:15.580 --> 00:19:22.340] Speaker 1: stop operating independently by 2030. Some will be bought, some will fail. And being bought
[00:19:22.340 --> 00:19:27.060] Speaker 1: in a downturn usually means bought cheaply, which is great for the buyer. It's great if
[00:19:27.060 --> 00:19:31.920] Speaker 1: you're Amazon, but it's rarely good for the shareholder who paid the full price. They also
[00:19:31.920 --> 00:19:36.520] Speaker 1: reckon that three and a half trillion of AI infrastructure is at risk of being written down
[00:19:36.520 --> 00:19:43.360] Speaker 1: in value, written off. And there is one more signal that I don't like. Since September, the
[00:19:43.360 --> 00:19:49.080] Speaker 1: Nasdaq and the interest rate on America's debt have moved together.
[00:19:49.860 --> 00:19:55.140] Speaker 1: Falling rates would normally help tech shares. This time, both are falling. Now, when
[00:19:55.140 --> 00:20:00.320] Speaker 1: people expect growth to slow, they pile into government bonds for safety. And that pushes
[00:20:00.320 --> 00:20:05.040] Speaker 1: the interest rate down. So it usually means the market is worried about growth, not about
[00:20:05.040 --> 00:20:09.560] Speaker 1: interest rates. So there are two ways this goes. Either the Nasdaq holds its line, the
[00:20:09.560 --> 00:20:15.260] Speaker 1: profits come in, and this turns out to be just a scam. Or the most indebted part of AI gets
[00:20:15.260 --> 00:20:21.840] Speaker 1: repriced the way the dot -com plumbing got repriced. And my view is that it's
[00:20:21.840 --> 00:20:28.380] Speaker 1: a reset of the borrowed layer, not the end of AI. But my view doesn't pay your bills.
[00:20:28.580 --> 00:20:35.420] Speaker 1: So you need a plan for both outcomes. So what am I watching? Well, first, the Nasdaq line.
[00:20:35.580 --> 00:20:42.300] Speaker 1: The Nasdaq 100 has a rising trend line that has held since the lows in April. It's 100 -day
[00:20:42.300 --> 00:20:46.040] Speaker 1: moving average. The average closing price of the last 100 days has climbed up to meet it.
[00:20:46.600 --> 00:20:51.180] Speaker 1: In the last sell -off, the index dropped to that level and then bounced hard. Traders call
[00:20:51.180 --> 00:20:57.260] Speaker 1: it a sort of a hammer pattern. Now, if that level holds, the scale may be over for now. If
[00:20:57.260 --> 00:21:03.500] Speaker 1: it breaks and stays broken, I'd expect the selling to speed up. Forced selling. The second
[00:21:03.500 --> 00:21:08.420] Speaker 1: thing is Corweave's bonds and its insurance price. If the cost of insuring its debt keeps
[00:21:08.420 --> 00:21:13.340] Speaker 1: climbing, lenders are getting more nervous, whatever the share price does. If it falls
[00:21:13.340 --> 00:21:18.520] Speaker 1: back, the panic is easing. So the debt market usually tells you first they're a little bit
[00:21:18.520 --> 00:21:23.700] Speaker 1: smarter than us share people, stock people. And then there is something that's third, and
[00:21:23.700 --> 00:21:30.000] Speaker 1: that is the profit reports. Goldman Sachs makes the point that at 21 times profits,
[00:21:30.340 --> 00:21:35.520] Speaker 1: the earnings could do some of the hefty lifting. The profits arrive, and they're bigger
[00:21:35.520 --> 00:21:41.740] Speaker 1: than we thought, the valuations look more reasonable. But if they don't, well, they're in
[00:21:41.740 --> 00:21:48.520] Speaker 1: trouble. Now, there was a fourth thing. who's selling so i keep the insider hub thing
[00:21:48.520 --> 00:21:52.940] Speaker 1: open on some of the most important stocks out there and i simply set myself an alert show
[00:21:52.940 --> 00:21:56.860] Speaker 1: you how you do that so i just click on the little save thing here at the top add to my
[00:21:56.860 --> 00:22:00.420] Speaker 1: stocks done and then i'm going to get alerts on those
[00:22:01.700 --> 00:22:05.080] Speaker 1: including you know the insider selling and the insider buying and everything else so here
[00:22:05.080 --> 00:22:10.220] Speaker 1: it says it's on your watch list and you can simply do that with some of the you know ai
[00:22:10.220 --> 00:22:15.320] Speaker 1: infrastructure companies here you could add a bunch of these there doesn't have to be all
[00:22:15.320 --> 00:22:19.380] Speaker 1: of them but just a couple of the major ones and just see if there's anything could be you
[00:22:19.380 --> 00:22:22.580] Speaker 1: know interesting happening to those guys and then you're going to get those notifications
[00:22:22.580 --> 00:22:27.120] Speaker 1: and you're going to be informed so start making a plan for yourself and that plan starts
[00:22:27.120 --> 00:22:32.020] Speaker 1: with understanding what you're looking at what you own i mean in 2002 people sold amazon at
[00:22:32.020 --> 00:22:35.560] Speaker 1: six dollars because the headlines told them the internet was finished and the whole thing
[00:22:35.560 --> 00:22:41.260] Speaker 1: was a giant mistake and of course it wasn't the internet was just getting started, it was
[00:22:41.260 --> 00:22:45.780] Speaker 1: the share prices that had gone too far. The people who could tell the difference are the
[00:22:45.780 --> 00:22:51.440] Speaker 1: ones who came out of this very, very well. Because a reset is when wealth changes hands. It
[00:22:51.440 --> 00:22:56.120] Speaker 1: moves from the people who didn't understand what they earned to the people who did. And
[00:22:56.120 --> 00:23:02.920] Speaker 1: which side of that you ended up on comes down to what you do in the next few weeks. Not in
[00:23:02.920 --> 00:23:08.240] Speaker 1: the next few years, you haven't got that luxury. So in the live training next saturday i'll
[00:23:08.240 --> 00:23:14.560] Speaker 1: take you through all of this step by step how a reset an ai will reach your portfolio
[00:23:14.560 --> 00:23:20.260] Speaker 1: and your pension how to read a bond price and the insurance price so you hear the warning
[00:23:20.260 --> 00:23:25.220] Speaker 1: before everybody else how to sort the owners from the borrowers and how the smart money is
[00:23:25.220 --> 00:23:30.780] Speaker 1: positioning right now before any of this lands in mainstream media news and no you don't
[00:23:30.780 --> 00:23:35.460] Speaker 1: need to be a trader for this. You don't need to have a finance degree. You just need to be
[00:23:35.460 --> 00:23:42.180] Speaker 1: willing to learn a skill nobody ever taught you. And most people won't look at this until
[00:23:42.180 --> 00:23:46.380] Speaker 1: it's too late. So you can prepare for it before. It's completely free. It's completely
[00:23:46.380 --> 00:23:50.520] Speaker 1: live. You can ask me anything. So grab your seat. That's about the bubble .com links down
[00:23:50.520 --> 00:23:55.020] Speaker 1: below. And if you've got some value out of this, share this with somebody who might get
[00:23:55.020 --> 00:23:57.560] Speaker 1: some benefit from this. I wish you all the best.
[00:23:57.640 --> 00:24:03.000] Speaker 2: Right now, I think we're going through some sort of weird phase transition. And normally,
[00:24:03.260 --> 00:24:07.960] Speaker 2: when you get bad economic news or you get bad jobs data, that people are going to fly to
[00:24:07.960 --> 00:24:09.380] Speaker 2: safety into the bond market.